Sen. Corker hopes Chrysler will merge

DETROIT (Reuters) - Tennessee Sen. Bob Corker, who pushed for tough conditions on the U.S. government bailout for automakers, said on Tuesday he hoped that Chrysler LLC would merge to become a viable company.

Corker, who was touring the Detroit auto show and scheduled to meet with U.S. auto executives, also said he was concerned that General Motors GM.N might not meet the aggressive restructuring targets set out under the $13.4 billion loan granted to the automaker by the Bush administration.

"Chrysler probably needs to merge with somebody, not necessarily disappear from the standpoint of existence," said Corker, who added the automaker owned by Cerberus Capital Management CBS.UL was not making the needed investment to remain competitive.

A Republican whose home state includes auto supply operations and the North American headquarters of Japan's Nissan Motor Co. (7201.T), Corker said he was concerned that the auto restructuring could be losing steam.

"I do think that we lost a little bit of a sense of urgency," Corker said, attributing it to a lack of legislative mandate for the restructuring targets on GM and Chrysler and uncertainty about the intentions of the Obama administration and the naming of a car czar.

Corker met with GM President and Chief Operating Officer Fritz Henderson before touring the auto show floor. He looked at several vehicles at GM, Ford Motor Co (F.N), Chrysler and Volkswagen, guided by representatives from each company.

Henderson told Corker that GM had begun discussions with bondholders and the United Auto Workers union, the senator said. It was important to see "shared sacrifice in those talks," the senator said.

Corker said GM needed to slash its $62 billion debt load by two-thirds to become viable.

"My only hope is that the things that have to happen in the next quarter get done so that these companies are able to deliver," Corker said.

BIG CUTS NEEDED

Corker led a group of Southern conservatives during the ill-fated congressional bailout effort, some of whom opposed a rescue while others wanted deeper labor concessions than those proposed by Democrats.

He attempted to broker a compromise that faltered over how quickly wages for unionized U.S. autoworkers would be brought in line with those at some Japanese rivals that build vehicles in the United States.

"More than ever I am strongly committed to the concepts I laid out," Corker said, adding he regretted the legislation failed to pass.

The wage proposal and two other labor provisions wound up in the $17.4 billion auto bailout approved by the White House and serve as a baseline for negotiations on bailout-related concessions that began this week between GM and the UAW.

Chrysler was granted $4 billion in emergency loans and has sought another $3 billion. Ford has asked for a $9 billion line of credit as insurance against a worsening economy.

A proposal to strip the Corker-inspired labor provisions from the automaker rescue was included in legislation introduced in the House of Representatives last week to expand the government's $700 billion corporate bailout program.

The UAW has objected to Corker's proposals for purportedly placing an unfair burden on the union compared with GM and Chrysler's other creditors.

Corker, surrounded by reporters, photographers and television crews at the show, said he hoped bondholders and other stakeholders would do what is necessary for GM, Chrysler and possibly Ford to have capital structures that allow them to compete.

"Companies that have moderate debt levels are having tremendous troubles today," he said. "So the troubles that all of these companies are having, if anything, reinforces the fact that this sort of re-engineering of the balance sheet needs to take place, and needs to take place right now."

Corker was invited to attend the Detroit auto show by Michigan Attorney General Mike Cox, a fellow Republican, and met with Cox during his tour of the show floor.

GM and Chrysler face an end-March deadline of submitting restructuring plans to the new Congress with expanded Democratic Party majorities in order to demonstrate that they have won needed concessions from the UAW and creditors.

(Additional reporting by Kevin Krolicki and Chang-Ran Kim; editing by Matthew Lewis and Leslie Gevirtz)